March 2005

Angela Wood
Bretton Woods Project
London
UK

Robin Broad in her useful and insightful paper - "The World Bank" ? paints a rather gloomy picture of civil societies' lack of impact on World Bank policies and operations. On the one hand I can emphasize with this perspective having witnessed the reversal of hard won reforms, Bank back-tracking on commitments and an unsurpassed use of rhetoric and redefinition. On the other, the efforts of activists over the past 25 years have had some significant impacts, not least in bringing the Bank's activities to the attention of the general public and politicians across the globe. The Bank is no longer a mysterious and little known institution operating with impunity and as a consequence the political stakes have been raised. In many cases civil society watch-dogging has prevented some of the worst actions and projects of the Bank from being taken.

I agree with Broad's conclusion that the Bank needs to be shrunk rather than reformed, although I wonder whether there is indeed a growing consensus in this direction, as she suggests. I wonder still further (as does Broad) whether there is any need for a World Bank at all. (Shalmali Guttal in her paper on the Asian Development Bank suggests that there is a need for a World Bank in addition to regional banks, although why is not elaborated.) I rather doubt that there is anything the World Bank is doing that the regional banks couldn't do just as well (if not better); although I note Guttal's criticisms of the Asian Development Bank and how these mirror World Bank criticisms, and the growing influence of the richest nations within it.

I also agree very much with the perspective that we need to know where we are going with our advocacy and activism. It is not sufficient to merely focus on what is wrong with the Bank as it currently exists but to have clearly in mind what sort of institution(s) we would ideally build to replace it and how we move from what we've got to what we aspire too. Until recently discussion of such visions and strategy has been lacking. Although time and resource pressures make it difficult, it is essential that NGOs and civil society organizations (north and south) work strategically together, to ensure that we conflict as little as possible in our advocacy demands and that we build on consensus where we can forge it to make the best use of advocacy opportunities. More attention needs to be given to creating the mechanisms that allow us to share and strategize. In this light this current e-forum initiative and workshop is very useful and welcome, as are mechanisms such as IFIwatchnet.

Having worked mostly on structural adjustment and conditionality issues my own thoughts on external assistance are that whilst countries need external resources for their development these are not best provided in the form of long term loans or grants. Ideally I think resources for development should come from trade where possible and international taxation. I find it hard to see that 'aid' whether multilateral, bilateral, grant or loan will ever be given without foreign policy strings attached. Although the introduction of a Tobin-like tax may still seem like a long way off I think that we need
to think carefully about how multilateral institutions are funded and the accordant power-relations and engagement amongst rich and poor nations. In the meantime efforts to reform conditionality are helpful.

There is a need for institutions to provide research and policy advice to governments. However, I doubt whether these need to be global (regional would probably be useful but well resourced national-level institutions would suffice); I don't think it is helpful to have advice giving and loan/grant giving done by the same institution, especially when an institution is dominated by a clique of governments; and certainly I don't think that it helps to have a monopoly on advice giving, as the World Bank (and IMF) more or less has despite the claims of the regional development banks. This monopoly needs to be broken and a first step to do so would be to open up approval processes of country programmes which are currently dominated by the Bank and IMF.

Overall, I think it is more important to focus on the Bank's advisory role than on its lending role. The IMF lends relatively little money and often provides none at all but its power to influence policy choice through its advisory function and 'seal of approval' function has not been diminished.

On the specific issue of the Bank's research department, I think that Broad is right that much of the 'research' is effectively propaganda and could be scrapped. However, I do think that it is important that multilateral institutions have effective means for evaluating and learning from their past mistakes and successes and that these lessons inform future advice.
The lack of accountability of staff makes them impervious to criticism, and I would suggest that staff and management incentives need to be changed to be based on performance.

If you were to invite me to downsize the Bank then I would see little need to continue with the Multilateral Investment Guarantee Agency or the International Finance Corporation. If there is a profit to be made the private sector will take the risk. I see no need to provide international public support to the private sector, particularly the multinationals and other northern capital, and I do not think these are effective institutions for securing more foreign capital investments in developing countries in general.
Whilst I am skeptical of the need for a World Bank as a means to provide resources or advice I do see a need for multilateralism (and I note that Broad points out that there have been discussions about alternative global institutions). From a political perspective the World Bank is important. I think that the influence of activists would be still less (and the foreign policy impacts of our governments worse) if we had to engage unilaterally with our individual governments rather than collectively through the Bank's (or some other institution's) Board (or parliament). I think it is important to recognize that downsizing the Bank will not automatically change the attitudes of foreign policy advisors, civil servants and politicians in our respective governments. If they don't have the World Bank through which to express themselves they will find other means. Thus in my mind changing the hearts and minds of those who engage in the Bank is more important than changing the Bank itself.

However, given the improbability of such a task and that we are activists not therapists, I think that an important first step is to radically reform the Bank's governance structures, although this task is perhaps by no means easier. The engagement of the southern executive directors in the Bank needs to be increased with more directors, fewer constituents, and more votes, whilst the US' veto power needs to be removed. There also needs to be much greater disclosure at much earlier stages in programme and project negotiation processes and involvement of southern parliaments in approving programmes, projects and loans and of both northern and southern parliaments in holding the Bank to account.

Perhaps the most important point raised by Broad is the need to play an astute political game in the coming months leading up to the conclusion of James Wolfensohn's presidency and the appointment of a new president. This is an opportunity, as Broad points out, to raise the level of debate on the past successes/failures and future direction of the Bank, and also about how the Bank continues to be dominated by the foreign policy interests of a few rich nations (mainly the US). However, I think we have to have our eyes wide open (unlike on other occasions) when it comes to identifying who are our allies in the struggle to reform/shrink the World Bank and who could pose an even greater threat than the World Bank itself.

Where I part company somewhat with Broad is on her suggestion that we engage Southern governments as natural allies, although I see that the new governments in Brazil, Uruguay and other countries could potentially be somewhat closer allies. Firstly, on the whole I don't think southern governments need much help from civil society to see how the Bank along with the IMF pedals its rhetoric to maintain their (and therefore the US government's) preferred paradigm. I think southern governments are well aware of their space to maneouver with the Bank and Fund, although many of them clearly lack the human capacity and resources to make the most of this. Maybe some civil society groups have the capacity to work along side their governments to help fill this gap.

Secondly, although the power of middle-income countries, such as Mexico, is growing in the Bank as the Bank fears for its level of income, I doubt that few Southern governments share the same agenda as civil society. The middle-income countries' ability to shop around for finance has given them greater political strength than they had when engaging with the Bank during the debt crisis years of the 1980s; enabling them to push the Bank to back-track on hard won social and environmental reforms advocated by civil society activists.

I do wonder if there is more both Northern and Southern NGOs could do to forge alliances with the bilateral donors' country offices. My suspicion is that some of the donors are closer to many NGO positions than Southern governments might be, and that in the developing country offices of the donors there is considerable frustration with the Bank (and maybe even more with the Fund).

However, I do think that it is important for southern and northern civil society organizations to engage with their governments and politicians where this is possible rather than to overlook national political processes in favour of advocating directly with the World Bank. One lesson of recent years is that many of us have been too quick to engage with the Bank without carefully considering for what ends. Engagement in itself, as we have witnessed, has not been enough. On the whole it has not been technical arguments face to face with Bank staff that have led to changes but public protest and action and the Bank's begrudging acceptance that some things simply have not worked.

For me the answer to the question as to how to best influence the Bank centers on how to build more grass roots political pressure at home (whether this be in north or south) and how to link these political constituencies in the north and south. I think that to a large extent many northern NGOs have failed to pay sufficient (if any) attention to building politicized domestic constituencies for reform.